Energy policy: Denmark sets the example

January 29, 2019 -

In progressing towards a carbon-neutral society, the Danes are already bringing home the bacon. With enthusiastic engagement at the community, business and political levels, Denmark looks set to be the first country to achieve carbon neutrality.

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It’s an ambitious aim: Copenhagen intends to become the world’s first carbon-neutral city by 2025.

And there are plenty of well-known, widely documented, relatively cheap and easy solutions to achieve it.

Firstly, wind power

It’s obvious! Community projects are springing up everywhere in a variety of forms. Middelgrunden, for example, is a farm of 20 offshore, 2-megawatt wind turbines owned by a community cooperative. Collective ownership has the advantage of avoiding the NIMBY syndrome (“not in my backyard”). The farm supplies over 32 000 households with electricity. Nationally, wind turbines produced 22% of Denmark’s total electricity consumption in 2012. This is forecast to reach at least 50% by 2025.

Secondly, energy efficiency

Public buildings and old residential buildings have been renovated to boost energy efficiency. Eco-neighbourhood construction programmes have been launched. Already by 2016, the urban heating system emitted 50% less CO2 than traditional gas-fired boilers thanks to improved energy efficiency and the gradual replacement of coal with biogas. Efforts continue to completely eliminate fossil fuels by 2025. Systems for recovering heat from aquifers (deep geothermal energy) are being installed.

Thirdly, eco-friendly means of transport

The proportion of travel by bicycle or public transport is expected to reach 75% by 2025. To attain this goal, cycling is encouraged by extending the network of cycle paths beyond the existing 350 km, raising awareness and taking measures to improve cyclist safety. Public transport is consistently and resolutely promoted; thanks to digital technology, display panels indicate the next arrival times; new metro lines will be opened; the number of bus lanes is multiplying; by 2025, the city’s car population will run on electricity or second and third generation biofuels or even hydrogen.

Environmental as well as economic benefits

The effects of this extensive, proactive policy are not solely environmental; it also benefits residents’ health! The figures are clear. Since physical exercise is good for our health overall, bicycle use will save the city EUR 230 million in annual healthcare costs (cycling currently accounts for 50% of travel). In other words, each kilometre travelled by bike saves EUR 0.77 in healthcare costs. And looking at the total costs of air pollution, accidents, traffic congestion – in Greater Copenhagen, 190 000 hours are lost in traffic jams, costing a total of EUR 760 million – as well as noise and wear and tear on infrastructure: the community actually gains EUR 0.16 for every extra kilometre travelled by bike instead of by car.

The benefits are also economic. The Danish wind turbine industry is flourishing, with over 350 companies producing turbine towers, blades, generators and control systems.

Such a pragmatic, proactive initiative is about taking the real risks into account, forging a clear vision of the future, providing sufficient financial resources and communicating transparently. It demands straight-talking and political leadership rather than political manoeuvring.

Obviously, the city’s relatively small size (roughly 600 000 inhabitants) makes it easier to tackle the issues with optimum solutions. But the changes Copenhagen has made prove that people are not powerless, that political action can be decisive, that the effects are both economic and financial. And that the first ones to invest in fighting climate change are also the first ones to benefit from what we can already tag as the 2020 revolution.

BNP Paribas Asset Management is following these developments closely and seeking to draw concrete conclusions for the management of its environmental funds.

To read more articles on the theme of sustainable and responsible investing (SRI) on our Investors’’ Corner blog, click here > Click here for more articles by Alexandre Jeanblanc